Stationarity of Real Exchange Rates: An Empirical Analysis for E7 Countries

Abstract

The aim of this study is to analyse the validity of purchasing power parity for Brazil, China, India, Indonesia, Mexico, Russia and Turkey. For this purpose, we employ a recently developed unit root test with structural breaks provided by Lanne et al. (2002) and Saikkonen and Lutkepohl (2002). The results indicate no evidence for purchasing power parity except China and Mexico.